Messaging Apps Took $13.9 Billion from Carriers in 2011

6:00 PM - February 22, 2012 - By Douglas Perry - Source : Ovum

Text messaging may be on the decline, a report by analysts at Ovum suggests.

According to the survey results released, the volume of IP-based social text messages sent in 2010 was equal to $8.7 billion in text messaging services offered by cellular providers. In 2011, that number jumped to $13.9 billion that carriers may have lost.

Ovum analysts conclude that text messaging has been on the decline, down 6 percent in 2010 and down 9 percent in 2011. Given the popularity of text messaging as well as the high profitability nature of text messages for carriers, providers are facing a problem and they need to update their legacy services if they do not want to lose their footing in the messaging market, Ovum said.

“Social messaging has disrupted traditional services, and operators’ revenues in this area will come under increasing pressure,” says Neha Dharia, consumer analyst at Ovum. “Tapping into the creativity of app developers, forming industry-wide collaborations, and leveraging their usage data and strong relationships with subscribers are the key ways for operators to ensure that they hold their ground in the messaging market.”

However, Dharia noted that it may already be too late for carriers to save their messaging infrastructure. Rather than competing with other carriers they would have to realize that they are competing with Internet services and will have to work together with developers, handset makers and other carriers to come up with innovative and attractive new messaging services. The carriers' advantage remains the fact that they remain in control of the data network and billing framework, which enables them to set the rules of the game and determine "to a great extent the services to which the user is exposed,” the analyst said.

Have you turned to alternative messaging means such as the built-in iMessage or BBM? Or do you go cross-platform with Whatsapp?

Comments

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Comments

Glarimore 02/23/2012 12:06 PM

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Data is data... whether that data is voice, text messages, or web browsing -- and carriers need to start treating it as such.

Consumers shouldn't have to buy packages texts, minutes, and data. There should just be a data plan.

GenericUser 02/23/2012 12:09 PM

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Glarimore :
Data is data... whether that data is voice, text messages, or web browsing -- and carriers need to start treating it as such. Consumers shouldn't have to buy packages texts, minutes, and data. There should just be a data plan.

Yeah, but then they wouldn't be able to charge us all these nice extra fees.

senkasaw 02/23/2012 12:10 PM

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Agreed...but good luck getting the carriers to see it that way...

Kamab 02/23/2012 12:13 PM

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Wireless service like internet bandwidth is a featureless service, as much as the providers wish it was not (or try to bundle things you don't want with it).

So much so, that with the increased demand for wireless bandwidth, things are going to get out of control if it doesn't become a public utility or the government takes no measure to break up monopoly controlled market.

ISPs and cell phone providers are an ever-increasingly very important part of our infrastructure, and they (ISPs moreso) are geographically set up to limit competition in the mutual intrest of comcast/verizon/etc.

robochump 02/23/2012 12:37 PM

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There was a time when texting was free. When it became more popular carriers decided it was profitable to start charging for texting services which doesnt use much bandwidth at all. Pure profit! Texting may be on the decline because carriers themselves may have over charged for the service and consumers are using other means. Hopefully this will result in cheaper texting rates! Doubt it though :-P

drwho1 02/23/2012 12:47 PM

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Should have read: Messaging Apps SAVED $13.9 Billion To Consumers in 2011

I don't believe that either, because that number is totally made-up.

jhansonxi 02/23/2012 1:41 AM

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The carriers' advantage remains the fact that they remain in control of the data network and billing framework, which enables them to set the rules of the game and determine "to a great extent the services to which the user is exposed,” the analyst said.
WiFi can fix that problem.

g-thor 02/23/2012 1:49 AM

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They didn't lose that much money - they never had it to begin with. What the egghead analysts at Ovum fail to realize is that words have meaning.

A more accurate analysis would be that IF people were inclined to pay per text, or IF there was no other method of sending text messages, then people would have paid billions of dollars, IF they chose to use texting under those conditions. Personally, I only use text messages because they are unlimited on my phone plan - no fee other than what they built into the basic charge.

If you offer a service and nobody buys it, then you didn't lose any money on what you didn't sell, especially an intangible product.

LORD_ORION 02/23/2012 2:23 AM

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Considering that SMS was a service maintenance implementation for telecom techs, and in place long before being sold to the public... I am glad.

There is absolutely no reason to charge to amounts they do.... and is is especially heinous to charge per inbound text at the same time disallowing you to disable this service.

Kyuuketsuki 02/23/2012 2:34 AM

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No money was "taken" from carriers, and carriers should have (and probably did) see this coming. Why the hell are customers going to continue paying absurd text messaging fees when messaging services can send it as data for almost nothing (since the payloads on text messages measure in the kilobytes).

I love how corporations have made it standard to describe money as being "taken" from them when people choose not to use their (overpriced) services in favor of better alternatives. Am I supposed to feel bad?

maddad 02/23/2012 4:24 AM

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The headline should have read "Messaging Apps kept Carriers from stealiong $13.9 billion from users in 2011. Txt is data, if you have a data plan it should be included with that. They shouldn't be able to charge you for sending a txt and the other person for receiving the txt you already paid for either.

dimar 02/23/2012 4:26 AM

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I really wonder if the big phone and internet companies are being run by criminals..

tului 02/23/2012 4:59 AM

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Good. Less money for rich companies and more money for normal people is never a bad thing.

everygamer 02/23/2012 6:05 AM

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It might be more interesting to compare this loss to messaging apps to the gain they have from the $30/month data plans.

h2_studio 02/23/2012 6:06 AM

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shouldn't they see this a long time ago? when IM is popular in the PC, then the phone becomes smartphone